U.S and Japan Take to the Skies

The Financial Times recently reported that the United States and Japan have agreed to expand their air-services agreement for the first time in ten years. The agreement provides additional access for direct passenger and cargo flights and connecting services throughout Asia.

The first amendment to the deal originally reached in 1998 is highlighted by an increased role for cargo carriers in the expanding trans-pacific market. United Parcel Service Inc. (UPS), the world's largest package freight operator, will add six daily flights to Nagoya to its existing daily services to Tokyo and Osaka. It will also be able to connect those cities to its regional hub in Shanghai. Polar Air Cargo will also be allowed to start services to Osaka.

The United States has made a number of efforts to enact an 'open skies' initiative that would allow carriers to fly from either country to any point in the other, without restrictions on capacity, fares, and alliance deals. The United States has lobbied open-skies arrangements with a number of countries, but critics maintain the country has a limited right to do so. That's because congressional resistance continues to prevent overseas carriers from flying within the large U.S. market.

Japan initially resisted the U.S. effort, but the emergence of competing airports in China and South Korea, as well as more advanced aircraft capable of flying more directly to the rest of Asia, forced the nation to reevaluate its position.

The liberalization of cargo services often serves as a precursor to more comprehensive reform of air-transport agreements. Indeed, the U.S. Department of Transportation has indicated that more talks concerning the liberalization of air traffic are in the offing.

The United States signed a new aviation deal with China earlier this year that will more than double the number of passenger flights between the nations by 2012.

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